While the government tries to cut down the number of non-franchised buses, it will not impose a cap on how many are allowed on the roads, according to a paper to be presented to legislators.

Efforts by the government to tackle the large number of tour and school buses, as well as shuttle buses for residents of housing developments and company employees, has led to 75 fewer vehicles in service during the past 18 months. The government claims the oversupply is 'now under control'. By April there were 7,137 non-franchised buses on the roads, compared with 7,212 at the end of 2004.

In a paper to be discussed at a Legco transport panel meeting on Friday, it stated a cap on the buses might lead to 'undesirable speculative activities' that could increase the cost of bus services.

A cap would also restrict flexibility in meeting the needs of some sectors that might require extra buses in special circumstances, the government claimed.

Several measures have been implemented, including steps to ensure most applicants for new service licences buy their buses second-hand from existing operators and restrict the types of licensing and use for each vehicle.

New measures will include putting the onus on bus operators to ensure their buses are used strictly in accordance with their licence regulations, even if they hire them out to others.

'It is not uncommon for passenger-service licence-holders to disclaim responsibility for unauthorised non-franchised bus operations, arguing that they have hired out the vehicles for a third party and have limited control over the use of the vehicles,' the government stated.

Licence-holders will be held 'ultimately responsible' for breaches of licence conditions, and they will be required to keep daily records of the use of the buses, including hiring and operating records.

Although the number of licences for different uses of most kinds of buses was dropping, the advent of Disneyland in Hong Kong meant more licences were being endorsed for cross-boundary services for international passengers, the government paper showed.

Cash or Octopus card payments on board buses will also be banned to prevent the operation of unauthorised bus services.

More stringent sanctions and penalties against flagrant or repeat operators of unauthorised services would also be imposed, the government stated.